Catholic Chain to Buy 2 Southland Hospitals

The nation’s second-largest Catholic-owned hospital chain is to announce today that it plans to acquire two big hospitals in Long Beach and San Bernardino as part of a major expansion into Southern California.

Catholic Healthcare West, a 25-hospital chain based in San Francisco, said it plans to acquire the assets of St. Mary Medical Center in Long Beach and St. Bernardine Medical Center in San Bernardino from Sisters of Charity of the Incarnate Word, a Houston-based Catholic hospital group. Financial details were not disclosed.

Catholic Healthcare West said the deal is the result of intense cost cutting in health care that is squeezing the profits of hospitals generally and threatening the survival of many inner-city Catholic hospitals. The chain said economies of scale will enable it to cut costs at the hospitals by as much as 10% and enhance their appeal to health-maintenance organizations.

The nonprofit San Francisco hospital chain “is a much bigger organization, and this merger is essential to the continuation of our mission in California,” said Dr. David B. Tillman, chief executive of St. Mary Medical Center.

St. Mary is a 551-bed facility in downtown Long Beach that employs 2,100. It is one of the community’s major hospitals and a teaching facility for the UCLA School of Medicine.

St. Bernardine is one of the oldest and biggest medical centers in the Inland Empire. The 443-bed facility employs 1,500.

Raymond Nelson, vice president of development for Catholic Healthcare West, said the hospital chain is in merger talks with both Catholic and non-Catholic nonprofit hospitals throughout Southern California.

“We expect to add eight to 10 hospitals in total by May,” Nelson said. “There is a potential for significant growth” because of the problems so many hospitals are having with cuts in payment from government health programs and demands by managed-health-care firms for discounted fees.

Catholic Healthcare West operates 23 hospitals in California and one each in Arizona and Nevada. It had revenue of $2.4 billion for the year ended June 30. In Southern California, the chain operates St. Vincent Medical Center near downtown Los Angeles and St. Francis Medical Center in Lynwood.